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Sunday, June 02, 2013

Cuisine and Contributions … And a License to Kill

By John F. Di Leo -

Reflecting on the
real-life impact of the IRS "Questionnaire-Gate" scandals…

“Congratulations,
Restauranteur!”

You’ve just
signed a lease on a great property. It’s
a beautiful restaurant, just the right size, with a modern kitchen, and a
terrific location with plenty of parking. You start decorating – painting, ordering window treatments, maybe
updating the floor a bit, bringing in a custom bar that you found at an
auction, re-upholstering the chairs, no, every other chair, to make it
distinctive. You’re making it your own.

You’ve had
the menu in mind for a while, so you start outfitting the kitchen to meet your
needs – removing the deep fryer, adding more ovens or ranges, whatever fits
your chosen cuisine. You start hiring,
signing contracts for perishables and meats and alcohol and sodapop. You get your local business license, the
approval of the health department, and now only one barrier remains:

Your liquor
license hasn’t come in yet.

What do you
do? You could open up without the liquor
license in hand… there are fast food restaurants that don’t serve alcohol, and
carry-out pizza and Szechuan places too…
But yours isn’t that kind of restaurant.
You don’t think it makes sense to open without being able to serve wine,
beer, and cocktails. So you wait for the
license.

Another week
goes by, then two, then three. You can’t
open without a liquor license. You’ve
paid for the redecorating, you’ve hired some of your staff, you’ve placed
advertising in the local newspapers, bought space in all the coupon books. Nothing’s coming in yet though; you’re not
open. An unexpected additional month’s
rent and utilities and salary are gone, while you twiddle your thumbs. And
wait.

Finally, a
month after the health department and the business license were already in the
window, the liquor license comes in, maybe with an apology for the delay. Well, that helps. A little.
But at least you can finally open, and you do.

All you’ve
lost was a month, but you’ll never know how many potential customers you missed
that month, how many people drove by every day, thinking “maybe I’ll try that
place when it opens…” and then gave up on it, or forgot about it, so they never
gave it a chance when they finally could.
Maybe another dozen potential regulars were lost? Maybe another few potential banquets or
office parties, the kinds of things that bring in key revenue and even more key
new customers to a restaurant? You’ll
never know.

Maybe you’ll
make it, maybe you won’t. You still have
a chance, but the restaurant business is the toughest there is, even when
everything goes well. Being delayed by a
late liquor license could be the death knell for your enterprise, even before
you’ve opened.

The Business of the Nonprofit

Now that we
have our local for-profit restaurant in mind, let’s consider what the same
scenario means to a nonprofit organization, shall we?

People tend
to think of a nonprofit as being entirely outside the business world, but it
isn’t. Many of the same market pressures
still apply; the laws of supply and demand are still present. You have competition in your space, just as
the restauranteur has competition in his.

When
starting up a nonprofit, such as a church or charity or educational group, you
are in competition with other churches, other charities, other educational organizations. That
doesn’t mean you wish them ill, but you know that you have to do as good a job
as you can, both at your stated activity and in your fundraising effort, in
order to gain supporters.

So you file
for your tax-exempt status, and you wait until you get it. Your normally don’t start the big stuff until
you have that letter from the IRS.

Can you
legally raise money without being tax-exempt?
Sure. Candidates raise money that
way… but it’s difficult. While political
candidate committees cannot offer tax-exempt benefits for their fundraising,
most other nonprofit groups can, and are expected to. The number of potential donors and activists
you lose by not being tax-exempt is immense.

If you can’t
offer tax-exempt status, overtaxed donors will likely look at others to donate
to. Perhaps others in your own space,
perhaps even others in another space entirely.
Many generous people set a figure for themselves, and commit to donating
five or ten or more percent of their income every month to some mix of their
church or synagogue, various charities, and educational organizations.

One might
choose, for example, to donate 5% to his church, and the other 5% to a
combination of worthy cancer research organizations, overseas missions, veteran
support funds, and political groups. If
one doesn’t get a fundraising letter from any veterans groups one month, no
problem – write another check to a mission, and see what solicitations come in
next month.

For any
organization that survives on donations, getting into that rotation, as early
as possible, is critical.

The Business of Fundraising

Nonprofit
fundraising is a complex specialty, dependent upon many disparate talents:

Purpose – It all begins, of course, with the
purpose of the organization. Different
charities or educational groups have different modus operandi, of course, and
setting out a path is step one. Will the
group be lobbying politicians? Performing research and development? Giving food
to the poor? Operating a foreign mission? Educating the public? The group makes
its choice and then enters that arena, with automatic competition from hundreds
of others in the same space… remembering that many of these purposes may have a
very defined time window – the next winter, the next school year, the next flu
season, the next election.

Method – The group then must determine how to
do it. If an educational group, will it
hold rallies at Daley Plaza? Operate and fund a speakers’ bureau? Publish
educational materials to distribute to schools? Publish a newsletter or magazine? All these have costs; a business plan is
needed to succeed, just as in the for-profit sphere. And again, each has a defined time window.

Target Audiences – Now you identify your markets… from
whom will you draw your activists, your writers or researchers, your event
planners and volunteers? From whom will
you draw your donors – and how will you reach out to them, with mailings,
personal appeals, fundraising banquets, promotions?

You can’t do
much in this world without money. The
organizers of a new charity may be happy to self-finance, to the extent that
they can, but unless you’re one of the famous philanthropists yourself, you will
need to reach out for donations before doing anything big.

So you file
your application with the IRS for tax-exempt status, which has always been
relatively automatic in the past, and you start writing your materials and
recruiting volunteers, maybe scouting out space for an office, making
connections in the community, so you can get started as soon as that tax-exempt
letter shows up.

If a nonprofit
sells banquet tickets, there’s an IRS rule that you declare the cost of the
dinner so that the ticket buyer knows what portion of the ticket is tax
deductible. If a nonprofit does mass
mailings, there are often different tax rates on the printing, and different
postage rates for the mailing, depending on the type of organization it is. Practically everything that’s printed needs a
disclaimer, and that disclaimer will differ depending on whether the
organization is tax-exempt or not.

So the
nonprofit waits. Researches, sure. Makes some calls, sure. But doesn’t start up in force, with
fundraising or room rental or genuine activism, until it receives that critical
letter from the IRS. A few weeks of such
waiting are expected; it takes that long to draft the fundraising materials and
educational publications anyway. But
beyond a few weeks, such a delay may prove destructive, even fatal, to this
startup organization.

The Jackboot of a Politicized
Government

While there
had been rumors and suspicious from the very beginning of the administration,
the proof began finally to flow in early 2013, as IRS personnel admitted
publicly that a highly confidential internal audit had proven that the IRS had
been targeting conservative and religious groups for harassment from virtually
the day the ink was dry on the first “Obama Stimulus” and the Tea Party
movement erupted in early 2009.

The
mainstream press, long a reflexive defender of this administration – burying the
stories they wanted buried, putting the best possible spin on those that they
had to cover – finally began to acknowledge the truth: that the massive civil
service of the federal government under this 44th president is being
used for political purposes. For
example:

The
Secretary of Health and Human Services, which now has the power to regulate
virtually all private sector people and organizations because of Obamacare, has
been revealed to have been illegally shaking down companies and organizations
for donations to a pet political fund of hers.

The
Secretary of Transportation designed an alleged economic stimulus program –
Cash for Clunkers – that was specifically designed to use federal dollars to destroy
American vehicles and convert American car buyers into customers of imported
cars (it succeeded in this pernicious goal, as over half the car purchases utilizing
these taxpayer rebates were for Japanese and South Korean cars to replace GM ,
Chrysler and Ford vehicles).

And now, in
addition to these and many more such criminal enterprises, we learn of how severely
the IRS has systematically attacked political and religious groups since this
president’s rise to power. Under IRS
boss Doug Shulman – a Clinton appointee foolishly retained by the George W.
Bush administration – the IRS has been hounding conservative and religious
groups applying for tax-exempt status, holding up their applications for months
or years, using the department handling tax-exempt organization requests as a
barrier to entry, retarding the development of such organizations in the polity
while speeding liberal groups through in a tax-exempt “application fast lane.”

It is now
known that – throughout the 2010 and 2012 election cycles – the IRS has been
engaging in a conscious, willful act of abuse of power – harassing, needling,
delaying the applications of any group including certain code words such as “tea
party,” “Constitution,” and “conservative;” it has now been proven that the
organizations slated for such harassment include all sorts of conservative and
religious groups, even missionary and charitable operations, if the IRS could
imagine any kind of link, however tenuous, with the American Right – even to
the extent of recognizing a single donor or author from among the group’s
boards of directors.

Harassment by the IRS, Notarized and
in Triplicate

The IRS’ harassment
appears, on its face, to be a delaying tactic, an ultimately harmless abuse of
power that makes people work a little harder, fill out some more forms, waste a
little more time. But this assumption is
deceptive, and neglects the very real result of such a time element to the
process.

As we have
seen from our restaurant example, government delays in licensing can make the
difference in any startup, both for-profit and nonprofit alike. Delaying a group’s nonprofit status postpones
its fundraising, forces delays in organization and activity, chews up money as
costs mount before compensatory funds can be raised, and likely causes it to
miss its intended target launch.

Organizations
intending to help the schools might lose a whole school year if they’re not
ready by the day that the schools set their year’s schedules. Groups intending to raise funds to buy winter
clothes lose a whole year if they can’t get going until winter is over. Groups hoping to help educate the public
before an election are utterly defeated if they can’t get going until Election
Day is upon them, or has even passed them by.

It is now
clear that the IRS tax-exempt unit under Lois Lerner was the key enforcer of an
administration plot to suppress both activism and conservative voter turnout,
from the beginning of this administration.
They chose their people well; Lois Lerner has a long record of
politicizing her federal job and harassing conservative candidates. She managed the obstruction machine within
the department, while IRS boss Shulman visited the White House at least 157
times (that’s just the visits that the Daily Caller reporters could find in the official
White House log; there could obviously have been even more meetings elsewhere
or unrecorded) to discuss policy and strategy.
As a frame of reference, the IRS chief’s 157 visits totaled more than
twice as many times as any cabinet member
visited the White House in Obama’s first term.

We will
never know how many organizations never got off the ground because of this
tax-exempt harassment tactic – how many were just slowed long enough to miss an
election cycle, how many were rendered less effective as a result, how many
lost key donors or volunteers, out of fear or exhaustion or cost.

In the
private sector, there’s a magic moment when two people are available who would
work together well if they got started together, or a store that can make the
most of a location or trend while that trend is hot, or an invention that can
become popular because its announcement coincides with some news event.

It’s the
same in the nonprofit world. Today’s
news cycle, or two talented people available at the same time, or a scandal or
newly debated legislation, all might be the perfect time for a certain group to
take off… for the government to intentionally hold them back so they miss this propitious
moment is simply tyrannical.

The USA has
long had a Hatch Act in place, to restrain political appointees in the
executive branch from forcing the civil servants under their control to abuse
their offices for political purposes. They
are banned from fundraising among the public sector employment pool; they are barred
from doing political activity on government time or at government desks, essentially
forbidden from allowing personal politics to affect the way they do their jobs
as regulators.

The IRS
scandal – Nonprofit-gate, IRS-gate, Questionnaire-gate, the final name for this
colossal abuse of power is yet to be settled – has proven that every fear of
the American Right was absolutely well-founded.

When the modern
American Left gains political power, they are either unwilling or incapable of
drawing that fundamental moral and practical line between their public duty and
their private desires.

Rather than
fairly fulfilling the public trust of their civil service jobs, leftists either
initiate illegal orders – or happily carry out the illegal orders of their
political superiors – to apply political tests to the people and entities that
they regulate, and then allow that test to color the government service they
provide.

This scandal
makes three things crystal clear:

First,
that many in this administration need to be prosecuted and jailed, probably at both
political and civil levels, both as punishment for their undemocratic abuses of
power and as a lesson to future administrations.

Second,
that there are simply too many such scandals to be a mesh of unfortunate
coincidences; the abuse of power comes from the top. This is a corrupt administration, and any but
the most spineless of Congresses would have initiated impeachment proceedings
long before now.

And
Third, that government has simply grown too big, and agglomerated too much
power, to ever be the honest source of governance that our Founding Fathers
intended for us. We must shrink the government
back to its constitutional bounds. Any
organization so large that it can regulate the private sector, any organization
so powerful that it can fund every housing purchase and every college tuition
loan, any organization so insulated from the criminal justice system that it
can be riddled with criminals and proceed in tyranny for years without fear of
prosecution, is simply too big and powerful to be tolerated by a nation that
still calls itself free. Such power is
evil and un-American, whether in the hands of Democrats or Republicans, whether
in the hands of the big cities or the small towns.

The only
honest government is a small government.
This scandal serves as yet another critical reminder that the American political
goal, today and for the future, must be to return to the days of Constitutional
“small government.” Only then can we again
appreciate and enjoy the limitless potential of limited government as our Founding Fathers so brilliantly and generously intended us to do.

Copyright 2013 John F. Di Leo

John F. Di Leo is a Chicago-based
Customs broker and trade compliance trainer.
In this “day job,” he has never found a problem limiting his own
political comments to a joke or two within the span of a four-hour seminar, and
he would never dream of abusing his position with a captive audience to unduly
make his work political… he just wishes the current administration shared the
same ethical commitment.

Permission is hereby granted to
forward freely, provided it is uncut and the IR URL and byline are
included. Follow John F. Di Leo on
LinkedIn or Facebook, or follow him on Twitter at @johnfdileo.

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Cuisine and Contributions … And a License to Kill

By John F. Di Leo -

Reflecting on the
real-life impact of the IRS "Questionnaire-Gate" scandals…

“Congratulations,
Restauranteur!”

You’ve just
signed a lease on a great property. It’s
a beautiful restaurant, just the right size, with a modern kitchen, and a
terrific location with plenty of parking. You start decorating – painting, ordering window treatments, maybe
updating the floor a bit, bringing in a custom bar that you found at an
auction, re-upholstering the chairs, no, every other chair, to make it
distinctive. You’re making it your own.

You’ve had
the menu in mind for a while, so you start outfitting the kitchen to meet your
needs – removing the deep fryer, adding more ovens or ranges, whatever fits
your chosen cuisine. You start hiring,
signing contracts for perishables and meats and alcohol and sodapop. You get your local business license, the
approval of the health department, and now only one barrier remains: